How To Buy A Condo In Your Twenties?

By: Reza Afshar

How To Buy A Condo In Your Twenties?


Our twenties are a time when most of us become more independent, assume more responsibilities, start building a career, a family, and start thinking of home ownership. People in their twenties often think about buying a home and how they will be able to afford it, given Torontos fast paced and costly real estate market.  Even if the dream of homeownership sometimes seems far-fetched for the young millennials, there are many examples proving that it is possible to own a place of their own and maybe even before their thirties. Other than a stable income, it’s also important to be aware of the mortgage responsibilities and everything else it takes to be able to cross the line into homeownership. With a little bit of patience, persistence and a detailed financial plan, you will be able to own a home and start to build equity very soon.

Saving Up For A Down Payment
Saving for a down payment requires discipline and hard work, however if you’ve decided to purchase a home, it’s an inevitable part regardless of your age. Many under-thirty millennials  have decided to live with their parents in while saving up for a down payment, so if that is an option for you, it may be a good one to consider.  It will not be easy to put money aside and any extra income that comes your way into a savings account but if you do it right, you could have a nice down payment ready in 14-18 months. Once you start shopping for a mortgage, you will understand the importance of a good down payment.

Even with several options and incentives for first-time homebuyers that will assist with the down payment, it’s always better to invest your own money to avoid any kind of additional payments (apart from the mortgage) in the next years. However, if you decide to go down that road, here’s what you can do:

-You can borrow up to $25,000 from your RRSP (Registered Retirement Savings Plan) for the down payment and pay it back over the next 15 years.

- You can borrow the money from family or friends as you’re not required to pay the down payment out of your own pocket thanks to the Gifted Funds Program.

Your Credit Score Is The First Step Towards Mortgage Approval
Lenders will need proof of how you handle your finances, and that’s where your credit report comes in. Without a loan, your credit history is practically non-existent, so you’ll need to get a credit card and use it for a while (responsibly, of course) to give lenders something to assess your finances. If you've already got one, make sure to pay off what you owe regularly, perhaps more than the minimum required. A great credit score will open the doors to better interest rates and more lenders.

You Probably Won't Need A Big Place
If you haven't started a family yet and have no plans to do so in the next few years, you probably don't need much space. If it's just you or you and a partner/ spouse, you won't need a three-bedroom home but rather a one-bedroom. Smaller places are usually lower in price, which works in your favour. When you decide to start a family, you can always sell and buy a bigger place or keep it as a rental income property.

Make Use Of The Mortgage Programs For First-Time Homebuyers
As a first-time homebuyer, you are entitled to different cash-back and tax rebate options. For example, you can claim a refund on both, the Ontario Land Transfer Tax (up to $4,000)  and the Toronto Municipal Land Transfer Tax (up to ca. $3,700). The sum you can claim back will depend on the sale price of the home and some other factors.

Make sure to familiarize yourself with all of the incentives you can get as a young first-time  homebuyer.  Some of those incentives include Government Grants, Flex-Down, the Purchase Plus Improvement Program, Cash back on closing, etc.

Think About Your Long-Term Goals And The Responsibilities
Toronto is an amazing city to call home, with almost anything you desire right outside your door, or at least within walking distance.  If your goal is to get into the real estate market and own a Toronto condo then educating yourself on homeownership is a great first place to start. It is important to be aware of all things that that are involved with buying and owning a condo such as mortgage, maintenance, property taxes, home insurance and repairs. Once you are confident that this is the right decision and step for you, let me help you find your first home!  Call or visit and lets get started!